Fri Sep 12 2014
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We’re Betting Against the Islamic State


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The effects of the Islamic State’s attacks in Iraq and Syria are dire and far reaching.

The oil industry, for instance, has been completely destabilized in parts of the region. Sabotage, stoppages, and the takeovers of oil wells have been a large part of the Islamic State’s strategy to weaken the area economically.

No one wants to see the terrorist group gain any more ground. And as President Obama made clear in his speech on Wednesday, the United States and its allies – including those in the Arab world – are going to defeat them.

There’s simply no other option.

Now, when the Islamic State is defeated, the companies in the region that were able to maintain their foothold in production will certainly benefit.

And I’m betting on one firm in particular…

The Cards on the Table

Despite the terrifying and unpredictable nature of the Islamic State, investors should not dismiss all oil companies in Iraq and Syria.

The region is vast. And even though media accounts make it seem as if the Islamic State is everywhere, that’s simply not the case.

Most of the more prolific oil-producing zones in the southern part of Iraq and in the Kurdish territories have not been affected. Kurdish crude oil is still flowing and being loaded onto tankers headed to the West.

In fact, there’s one company that’s tied its fortunes to the region and is exploring, drilling, and producing oil. And the current violence hasn’t dampened its production or efforts. I’m talking about Norway’s DNO (DNO.OL).

Sure, since the crisis began, DNO shares dropped by more than 40%. But the stock is slowly creeping back up, and it’s now only down by 20%.

The company just reported revenue of around $ 140 million, with profits coming in at $ 44 million (a very healthy margin).

Production is up 76% year over year, and the company is proceeding with more drilling in Kurdish Iraq, Tunisia, and Oman.

The company has been operating in the Kurdish region of Iraq for 10 years, but it only recently started producing significant quantities of oil. The daily production from its Tawke field in Northern Iraq is around 130,000 barrels per day (bpd) of oil equivalent, and its target for that field is 200,000 bpd.

Of course, this type of investing isn’t for the faint of heart. But here at Wall Street Daily, we always take the time to get an up-close look.

In a few weeks, I’ll be in the region meeting with my contacts to get a feel for what’s happening on the ground.

Often, out of crisis, springs opportunity. We’re not afraid to find that opportunity for you.

And “the chase” continues,

Karim Rahemtulla


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Tags Iraq, Syria
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